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4 Social Trends Impacting the Future of Online Fundraising

Geoff Livingston co-founded Zoetica to focus on cause-related work, and released an award-winning book on new media, Now is Gone, in 2007.

Social fundraising is becoming a buzzword within the cause space. The growing trend allows citizens to create their own fundraising campaigns independent of, but still benefitting non-profits. These efforts use a middle platform or set of tools to create grassroots communications across traditional social networks like Facebook and Twitter.

While Facebook and Twitter continue to dominate the general social networking space, there is a need for middleware platforms to provide additional functionality when it comes to causes. These solutions also incorporate traditional outreach mechanisms like e-mail. Causes, Crowdrise, Jumo, and Razoo are some of the early leaders empowering individual fundraisers, donors and non-profits with grassroots functionality.

"Obviously, people/orgs want to capitalize on the best feature of Facebook — the wealth of social data," said Holly Ross, executive director of the Nonprofit Technology Network. "What they don't want to [deal] with is the Facebook UI etc. When Facebook is a platform and not just a site, you get the best of both worlds. An additional feature is that some of these third-party tools also integrate with your donor database, so you can actually track which of your supporters are participating, and what that participation yields for you."

Here's a look at how these early leaders are starting to shape the social fundraising marketplace, and some of the challenges the rise of middleware brings.

1. The Rise of the Independent Free Agent

Because these platforms support individuals engaging in their own citizen philanthropy activities, they are attracting free agents — people who want to operate outside the domain of a 501c3. These free agents feel empowered to fundraise for a cause they care about without management. When their efforts are completed, a check is cut for the non-profit, and the individual can walk away or choose their next project for the cause.

As independent philanthropists continues to rise, more influence may transfer to them, making efforts and experiences a critical piece of the puzzle. Causes, a recent recipient of $9 million in venture funding, is expected to move towards a more individual-centric experience over the course of 2011.

"Philanthropy is going to become a more donor-centric experience, and non-profits will not be able to 'own' the donors, as people in the sector commonly say," said Matt Mahan, the vice president of social impact for Causes. "Individual donors can talk to each other and discuss what’s working via the Internet. This creates more transparency, accountability, and a more enjoyable experience with donors. And this will cause non-profits to become more responsive and better."

2. The Importance of a Social Good Identity

At the core of the fundraising platforms' approach to the individual is the concept of a social good identity. Facebook and Twitter provide general identities for people, but they don't allow someone to delve deeply into their philanthropic side. This lack of definition also prevents opportunities to connect based on shared interest in social good.

Whether or not there's a real market for a place to connect and explore social good identity remains to be seen. Prior attempts at creating social good communities like TechSoup's NetSquared and Idealist have done well within the causes space, but they have not translated to the general public.

Several platforms like Crowdrise and Causes see themselves transcending that gap and breaking into the general public marketplace. "If Facebook is the platform where people assert 'This is who I am as defined by who my friends are' and Twitter is where people say 'This is who I am as defined by what I’m doing right now'... Crowdrise is where people proclaim 'This is who I am as defined by what I’m doing to make the world a better place,' " said Jeffrey Wolfe, co-founder of Crowdrise.

3. The Challenge for Middleware Platforms

Social fundraising can be a challenge for non-profits. Often, while raising money for the cause, there are fees ranging from 2.9% to 8% (credit card fees plus transaction fees). In addition, some of the platforms protect the individual's privacy and don't provide non-profits contact information, denying them the opportunity to build a file of contacts.

Each platform has strengths and weaknesses in this regard. Some of the weaknesses from the non-profit's perspective are the very strengths that make the platforms attractive to individuals. But generally, non-profits have to decide whether to plunge into the space and support it.

"At the end of the day though, 'social fundraising' will not be a silver bullet for raising money for your non-profit," said Allyson Kapin, editor of the Care2 Frogloop blog. "Using multiple channels (e-mail, your website, direct mail, telemarketing, etc.) to raise money will bring in the dough!"

Razoo is differentiating itself by making its grassroots tools more non-profit friendly. "We make it incredibly easy for non-profits to raise money, giving them everything they need," said Sebastian Traeger, CEO of Razoo. "From the ability to tell their stories, to receipting donors, handling refunds and customer support, to simple, robust reporting, to tools to empower peer and team fundraising to widgets to distribute throughout the web — all with no setup or monthly fees, and transaction fees of just 2.9 to 4.9%."

4. Team Focus for Social Fundraising

One unique development is the rise of teams in these platforms. Causes, Crowdrise and Razoo all have added multi-person functionality to enable grassroots fundraising for groups of people. Whether it's friends, competitive fundraising groups, offices, school clubs or civic groups, people can now enjoy the autonomy of an independent grassroots platform not seen before in the non-profit sector.

One example is musician Glen Hansard’s campaign on Crowdrise to buy two much-needed trucks for the Maasai Wilderness Conservation Trust (MWCT). People join the team as a show of support and others join to fundraise. One person on the team put on a concert for her friends to raise money, another did a bake sale, another offered to build websites for donors. Showing a higher level of connectivity, two of the team members that had never met before just went to Kenya together to volunteer for the MWCT.

"Social fundraising, where fundraisers and charities involve their friends and supporters, is incredibly effective," said Crowdrise's Jeffrey Wolfe. "It takes an individual team leader or charity that inspires their squad to set personal fundraising goals, feel connected to the team, and fully engaged in the campaign."

Razoo is also putting resources into supporting teams: "Since teams represent the future, we plan to pour our efforts into making them more fun, social and easy," said Razoo's Sebastian Traeger.

The Future?

The future of online giving is still uncertain. What is clear is the early market leaders will try to cement their role in the space this year. "The non-profit software market is defined by a few big names and then oodles of niche product that fill very specific needs," said NTEN's Holly Ross. "We see this in every single software type. So I think that we'll see these early leaders continue to get more robust, but I see a lot of other players continuing to enter the space."

There is also hope that if successful, the social fundraising middleware platforms will not only do well, but successfully grow online donations as a whole. Perhaps it's an ideal, but it sure seems worth the strenuous effort.

"If we can power philanthropic identity, we can create more philanthropic activity because it’s easier," said Causes' Matthew Mahan. "As people interact with each other, and see millions of people interacting, it will become a more worthwhile experience. It’s part of making the experience more meaningful. We think this is a win-win, and that people will end up donating even more."

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